The effect of institutional quality on agricultural value added in East Africa

This study investigates the effect of institutional quality on agricultural value added in East Africa. It uses a panel dataset spanning from 2000 to 2020, taken from seven East African countries. The data obtained from the World Bank, Mo Ibrahim Foundation, and FAO databases were analyzed using the bias-corrected LSDV model. The results show that voice and accountability has a negative significant effect on regional agricultural value-added, while government effectiveness has a positive significant effect on regional agricultural value-added. Besides, higher per capita gross domestic product, a lower proportion of rural population, and a higher proportion of education expenditure appeared to have significant incremental effects on agricultural value-added. The results imply that institutional quality has a vital role in dictating the growth of agricultural value-added in East Africa. In this region, effective institutions increase agricultural value-added. Governments and other development practitioners should thus work to enhance the effectiveness of the related institutions in the region. Strengthening and improving the performance of such institutions is essential for a sustained increase in agricultural value-added. This would be more operational if combined with increased expenditure in education and the low size of the rural population.